Final answer:
An excise tax on gasoline shifts the supply curve upward, not the demand curve, and the change in demand would not necessarily match the tax amount because of demand elasticity.
Step-by-step explanation:
The statement that an excise tax of 20 cents on gasoline shifts demand down by exactly 20 cents is false. An excise tax on a commodity like gasoline typically shifts the supply curve upward or to the left, because the tax increases the cost of production for suppliers. This increased cost is often passed on to consumers in the form of higher prices. However, the effect on the demand curve is not direct; demand may decrease due to higher prices, but not necessarily by the exact amount of the tax, as the elasticity of demand will influence the actual quantity by which it decreases.
In the scenarios described, prices below equilibrium level indicate how demand and supply react to price changes. At a lower price, demand increases while supply decreases. Conversely, a higher price would typically result in a decrease in demand and an increase in supply, all else being equal. These movements are reflective of the market's attempt to reach an equilibrium where the quantity demanded equals the quantity supplied.